After being shut out of early coronavirus relief, minority business owners are set for a major boost over the next two weeks after President Joe Biden’s administration opened a window of opportunity aimed at helping America’s smallest and neediest businesses.

Starting February 24, there will be new rules for the self-employed and companies that employ fewer than 20 people, which combined make up more than 98% of all small businesses in the U.S., according to a White House statement.

Those rule changes are set to level the field for minority business owners who have received a disproportionately small share of relief money since the CARES Act was passed in late march 2020. In previous PPP rounds, larger companies with existing banking relationships were prioritized leaving many minorities shut out of the program. 

Some early 2020 estimates suggest 90% of minorities were excluded from the program.

The previous round of loans “left too many minority-owned and mom-and-pop businesses out while larger, well-connected businesses got funds quickly,” said a White House official Sunday.

The new rules would increase aid to America’s smallest businesses and self-employed individuals, many of which are run by Black people, women and other minorities. 

Over the last decade, minority businesses have accounted for more than half of the two million new businesses started in the U.S. and have created nearly 5 million jobs and annual sales over around $700 billion, according to a recent U.S. Senate report. 

In the Southeast, small minority-owned firms represent a larger total of all small businesses compared with national figures, according to a federal reserve of Atlanta report. Nationwide, 19.8 percent of small businesses are minority owned compared with 21.6 percent in the Southeast.

In Florida and Georgia the numbers are higher still, with around 25% of all small businesses being minority-owned. Those figures fall to under 15% in Alabama, Mississippi, Tennessee and Louisiana.

The new rules will allow businesses with 20 employees exclusive access to the Payment Protection Program, the loan program created by Congress in March 2020 that offered forgivable loans aimed at offsetting losses brought on by the COVID-19 and prevented staff being laid-off.

Businesses with more than 20 employees now face a two-week freeze, all coming before the March 31 deadline when the relief program ends.

One of the most significant rule changes being brought in is that self-employed people, of which 70% are women and people of color, according to the Small Business Association, will be able to access loans even if they are operating an unprofitable business. Previous PPP loan rules meant that self-employed people could only apply if their businesses were profitable. This resulted in loans as little as $1 being offered, according to the White House’s statement. Similar restrictions did not apply to larger companies.

Those changes for self employed people, which allocate $1 billion of federal relief funds, allow them to take loans based on gross income, which excludes most expenses. Businesses that employ between 1-20 people are not limited to the $1 billion fund and will remain part of the larger CARES Act funding.

“The change will increase our awareness and capture a higher response rate to better illustrate the impact the Paycheck Protection Program is having across various population segments,” administration officials said. 

But what do you need to know before applying?

First off, you must employ fewer than 20 employees or be self-employed, an independent contractor or a sole proprietor and apply for the loan between February 24 and March 10. However, you can still apply outside of the window but will compete with other larger businesses.

Once the two-week period ends, normal PPP rules apply, according to the Small Business Administration. Any business with fewer than 500 employees can apply for a first-time loan, whereas any business with fewer than 300 employees can apply for a second loan.

The amount of time you have to spend the loan has increased from 8 to 24 weeks, and at least 60% of the money must be spent on maintaining payroll in order to apply for forgiveness. The remaining 40% can be spent on other eligible costs such as rent, mortgage expenses and utility payments.

Other forgivable expenses include personal protective equipment, supplier costs, operations expenditures and any property damage costs relating to “public disturbances” in 2020.

The interest rate remains at 1%. If all criteria is met the loan is turned into a grant.

If you’re seeking a second forgivable loan, you must prove that you saw a 25% decrease in gross receipts between any quarter in 2019 and the same quarter in 2020. The amount you can borrow is based on payroll from either 2019 or 2020.

Those who are self-employed, sole proprietors or independent contractors base their applications off gross income.

How do I get the loan?

For many, this can be the most daunting part, especially if you don’t have an existing business relationship with a lender. Fortunately, the Small Business Administration has an online form that matches you with a local lender.

All you need to start the application process is your email address, name and cell number. The SBA is making matches within two days of your application.

If you would prefer to go straight to a lender, you can search for eligible financial institutions here.

After being shut out of early coronavirus relief, minority business owners are set for a major boost over the next two weeks after President Joe Biden’s administration opened a window of opportunity aimed at helping America’s smallest and neediest businesses.

Starting February 24, there will be new rules for the self-employed and companies that employ fewer than 20 people, which combined make up more than 98% of all small businesses in the U.S., according to a White House statement.

Those rules changes are set to level the field for minority business owners who have received a disproportionately small share of relief money since the CARES Act was passed in late march 2020. In previous PPP rounds, larger companies with existing banking relationships were prioritized leaving many minorities shut out of the program. 

Some early 2020 estimates suggest 90% of minorities were excluded from the program.

The previous round of loans “left too many minority-owned and mom-and-pop businesses out while larger, well-connected businesses got funds quickly,” said a White House official Sunday.

The new rules would increase aid to America’s smallest businesses and self-employed individuals, many of which are run by Black people, women and other minorities. 

Over the last decade, minority businesses have accounted for more than half of the two million new businesses started in the U.S. and have created nearly 5 million jobs and annual sales over around $700 billion, according to a recent U.S. Senate report. 

In the Southeast, small minority-owned firms represent a larger total of all small businesses compared with national figures, according to a federal reserve of Atlanta report. Nationwide, 19.8 percent of small businesses are minority owned compared with 21.6 percent in the Southeast.

In Florida and Georgia the numbers are higher still, with around 25% of all small businesses being minority-owned. Those figures fall to under 15% in Alabama, Mississippi, Tennessee and Louisiana.

The new rules will allow businesses with 20 employees exclusive access to the Payment Protection Program, the loan program created by Congress in March 2020 that offered forgivable loans aimed at offsetting losses brought on by the COVID-19 and prevented staff being laid-off.

Businesses with more than 20 employees now face a two-week freeze, all coming before the March 31 deadline when the relief program ends.

One of the most significant rule changes being brought in is that self-employed people, of which 70% are women and people of color, according to the Small Business Association, will be able to access loans even if they are operating an unprofitable business. Previous PPP loan rules meant that self-employed people could only apply if their businesses were profitable. This resulted in loans as little as $1 being offered, according to the White House’s statement. Similar restrictions did not apply to larger companies.

Those changes for self employed people, which allocate $1 billion of federal relief funds, allow them to take loans based on gross income, which excludes most expenses. Businesses that employ between 1-20 people are not limited to the $1 billion fund and will remain part of the larger CARES Act funding.

“The change will increase our awareness and capture a higher response rate to better illustrate the impact the Paycheck Protection Program is having across various population segments,” administration officials said. 

But what do you need to know before applying?

First off, you must employ fewer than 20 employees or be self-employed, an independent contractor or a sole proprietor and apply for the loan between February 24 and March 10. However, you can still apply outside of the window but will compete with other larger businesses.

Once the two-week period ends, normal PPP rules apply, according to the Small Business Administration. Any business with fewer than 500 employees can apply for a first-time loan, whereas any business with fewer than 300 employees can apply for a second loan.

The amount of time you have to spend the loan has increased from 8 to 24 weeks, and at least 60% of the money must be spent on maintaining payroll in order to apply for forgiveness. The remaining 40% can be spent on other eligible costs such as rent, mortgage expenses and utility payments.

Other forgivable expenses include personal protective equipment, supplier costs, operations expenditures and any property damage costs relating to “public disturbances” in 2020.

The interest rate remains at 1%. If all criteria is met the loan is turned into a grant.

If you’re seeking a second forgivable loan, you must prove that you saw a 25% decrease in gross receipts between any quarter in 2019 and the same quarter in 2020. The amount you can borrow is based on payroll from either 2019 or 2020.

Those who are self-employed, sole proprietors or independent contractors base their applications off gross income.

How do I get the loan?

For many, this can be the most daunting part, especially if you don’t have an existing business relationship with a lender. Fortunately, the Small Business Administration has an online form that matches you with a local lender.

All you need to start the application process is your email address, name and cell number. The SBA is making matches within two days of your application.

If you would prefer to go straight to a lender, you can search for eligible financial institutions here.